Boeing's protest has wings

GAO says 'the Air Force has made a number of significant errors'

Posted: Thursday, June 19, 2008

By Tim Carpenter

Congressional analysts tossed jet fuel Wednesday on a dispute over the Air Force's rejection of Boeing Co.'s bid for a $35 billion contract to manufacture a new generation of in-flight refueling tankers.

The Government Accountability Office issued a stunning condemnation of the Air Force's decision to hand a contract for 179 tankers to Northrop Grumman Corp. and European Aeronautic Defence & Space Co.

A bipartisan group of Kansas politicians pounced on the GAO's recommendation to reopen the competition and rekindle hope Boeing might claim a contract capable of supporting thousands of jobs in Wichita.

"Our view of the record led us to conclude that the Air Force has made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman," said Michael Golden, an attorney for the congressional investigative agency. "We, therefore, sustain Boeing's protest."

The Air Force contract could be worth $100 billion with the acquisition of a full fleet of 600 aerial tankers. The new aircraft would replace the aging KC-135 tanker. A dozen of those 50-year-old, maintenance-needy tankers are based at Forbes Field in Topeka.

Boeing filed a formal appeal of the Air Force's selection in March, prompting a lobbying campaign between Boeing and Northrop-EADS. The GAO report isn't binding, but it exerts pressure on the Air Force to recast the bidding. The Air Force had no immediate reaction, but by law it has 60 days to respond.

"Though we are disappointed, it is important to recognize that the GAO announcement is an evaluation of the selection process, not the merits of the aircraft," said Louis Gallois, chief executive of EADS.

Mark McGraw, vice president of tanker programs at Boeing, said the company welcomed the GAO statement.

The agency concluded the Air Force improperly declared the Boeing tanker would be more expensive to operate over its life than the Northrop-EADS aircraft. The agency said the Air Force shouldn't have extended Northrop-EADS extra credit for offering a larger plane that could carry more fuel, cargo and troops.

Sen. Pat Roberts, R-Kan., said he would introduce legislation mandating the Air Force conduct a new evaluation of suitors if the service doesn't voluntarily take that step.

"We have said repeatedly that the Air Force's decision was wrong and skewed to the wrong company with the wrong plane," Roberts said. "The Air Force has no choice but to rebid the tanker contract."

Gov. Kathleen Sebelius said the GAO review demonstrated "the Air Force made changes during the decision process that gave Boeing's competitor an unfair advantage."